1
Fair Work Act 2009
s.604 - Appeal of decisions
The Australian Workers' Union
v
Rigforce Pty Ltd t/a Rigforce
(C2019/2792)
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT CLANCY
DEPUTY PRESIDENT COLMAN SYDNEY, 23 OCTOBER 2019
Appeal against decision [2019] FWCA 2332 of Commissioner Lee at Melbourne on 5 April
2019 in matter number AG2019/835.
Introduction
[1] The Australian Workers’ Union (AWU) has lodged an appeal, for which permission to
appeal is required, against a decision of Commissioner Lee issued on 5 April 20191
(Decision) in which he approved the RFD Enterprise Agreement 2019 (RFD Agreement). The
AWU contends that the approval of the RFD Agreement was in error because the
Commissioner could not have been satisfied on the material before him that:
(1) the RFD Agreement had been genuinely agreed to by the employees covered
by it, as required by s 186(2)(a) of the Fair Work Act 2009 (FW Act); and
(2) the group of employees covered by the RFD Agreement was fairly chosen, as
required by s 186(3) of the FW Act.
Extension of time
[2] The AWU’s appeal was lodged on 1 May 2019. Rule 56(2) of the Fair Work
Commission Rules 2013 relevantly requires that a notice of appeal against a decision of a
single Commission member be lodged within 21 days after the date of the decision being
appealed against, or within such further time allowed by the Commission on application by
the appellant. Because the appeal was lodged five days outside the 21-day time limit, it is
necessary for the AWU to obtain an extension of time in order to prosecute its appeal. The
AWU submits that an extension should be granted because:
1 [2019] FWCA 2332
[2019] FWCFB 6960
DECISION
E AUSTRALIA FairWork Commission
[2019] FWCFB 6960
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the AWU was not aware that an application had been filed by Rigforce Pty Ltd
(Rigforce) for approval of the RFD Agreement, and consequently was not involved in
the first instance proceedings;
the AWU had only become aware of the existence of the RFD Agreement on 25 April
2019, and consequently was not reasonably able to file its notice of appeal within the
21-day period upon becoming aware of the Decision;
the delay was minimal and would not significantly prejudice Rigforce, the respondent
to the appeal; and
if any of the AWU’s grounds of appeal merited success, the potential injustice that
would arise from the decision not being quashed would be substantial and would
outweigh the importance of compliance with the 21-day period in all the
circumstances.
[3] Rigforce opposed the grant of an extension of time on the basis that:
it had already submitted and been awarded tenders on the basis of the RFD
Agreement, and the commercial and industrial certainty of an in-term agreement ought
not be displaced by an appeal brought out of time;
the AWU, as a sophisticated employee organisation with an in-house legal and
industrial team with the capacity to review, in real time, agreement applications on the
Commission’s website, did not in the circumstances have an acceptable reason for the
delay; and
the appeal itself lacked merit.
[4] We have decided to grant the AWU the necessary extension of time. First, for reasons
set out later in this decision, we consider that one of the AWU’s appeal grounds has
significant merit. Second, given that the AWU was not a participant in the first instance
proceedings and did not become aware of the existence of the RFD Agreement until the day
before the 21-day period expired, we consider that it has provided a reasonable explanation
for the delay. In the circumstances which we will shortly describe, the AWU had no basis to
know that Rigforce had entered into an agreement which might be the subject of an approval
application, and in any event the lack of an apparent relationship between the name of the
RFD Agreement and Rigforce is likely to have hindered the capacity of the AWU to identify
the application, and the Decision, on the Commission’s website as being of interest to it.
Third, the delay is a short one, and it is not suggested that it has adversely affected the
capacity of Rigforce to respond to the appeal.
Additional evidence
[5] Both parties sought to adduce additional evidence in the appeal. The AWU sought the
admission of a witness statement made by Daniel Cain, who is the National Organiser
(Offshore Oil and Gas) for the AWU as well as the Divisional Branch Assistant Secretary of
the Maritime Union of Australia Division of the Construction, Forestry, Maritime, Mining
and Energy Union (CFMMEU). Mr Cain described events relevant to the circumstances in
[2019] FWCFB 6960
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which the RFD Agreement was made and explains how it was that the AWU first became
aware of the RFD Agreement only after it had already been approved in the Decision. We
have decided to admit this statement because, firstly, the AWU was not aware of the first
instance proceedings and therefore did not have the opportunity to adduce Mr Cain’s evidence
before the Commissioner and, secondly, we consider that the statement is probative as to
matters requiring determination in this appeal.
[6] Rigforce sought the admission of a witness statement made by Mr Conor O’Brien, the
Managing Director of Rigforce. This statement described the circumstances in which the
terms of the RFD Agreement were explained to relevant employees, and was responsive to an
issue raised during the hearing of the appeal (not considered at first instance) concerning an
evident problem in Rigforce’s explanation of the rates of pay (which we identify and consider
in greater detail later). We will accordingly admit this witness statement into evidence also.
Statutory framework
[7] An enterprise agreement only becomes legally effective if and when it is approved by
the Commission.2 Section 186(1) of the FW Act establishes a “basic rule” that, where an
application for approval of an enterprise agreement has been made, the Commission must
approve the agreement if the requirements set out in ss 186 and 187 are met. One of those
approval requirements, set out in s 186(2)(a) and applicable only to non-greenfields
agreements, is that the Commission must be satisfied that the agreement has been “genuinely
agreed to” by the employees covered by the agreement. Section 188 defines when employees
may be considered to have genuinely agreed to an enterprise agreement as follows:
188 When employees have genuinely agreed to an enterprise agreement
(1) An enterprise agreement has been genuinely agreed to by the employees covered
by the agreement if the FWC is satisfied that:
(a) the employer, or each of the employers, covered by the agreement
complied with the following provisions in relation to the agreement:
(i) subsections 180(2), (3) and (5) (which deal with pre-approval
steps);
(ii) subsection 181(2) (which requires that employees not be requested
to approve an enterprise agreement until 21 days after the last notice of
employee representational rights is given); and
(b) the agreement was made in accordance with whichever of
subsection 182(1) or (2) applies (those subsections deal with the making of
different kinds of enterprise agreements by employee vote); and
(c) there are no other reasonable grounds for believing that the agreement has
not been genuinely agreed to by the employees.
2 ALDI Foods Pty Ltd v Shop, Distributive and Allied Employees Association [2017] HCA 53, 270 IR 459 at [34]
[2019] FWCFB 6960
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(2) An enterprise agreement has also been genuinely agreed to by the employees
covered by the agreement if the FWC is satisfied that:
(a) the agreement would have been genuinely agreed to within the meaning
of subsection (1) but for minor procedural or technical errors made in relation
to the requirements mentioned in paragraph (1)(a) or (b), or the requirements
of sections 173 and 174 relating to a notice of employee representational
rights; and
(b) the employees covered by the agreement were not likely to have been
disadvantaged by the errors, in relation to the requirements mentioned in
paragraph (1)(a) or (b) or the requirements of sections 173 and 174.
[8] The pre-approval step in s 180(5), which is an element of the “genuinely agreed”
definition in s 188(1)(a)(i), is expressed as follows:
Terms of the agreement must be explained to employees etc.
(5) The employer must take all reasonable steps to ensure that:
(a) the terms of the agreement, and the effect of those terms, are explained to
the relevant employees; and
(b) the explanation is provided in an appropriate manner taking into account
the particular circumstances and needs of the relevant employees.
[9] The other agreement approval requirement relevant to this appeal is the “fairly
chosen” requirement. This is set out in s 186(3) and (3A) as follows:
Requirement that the group of employees covered by the agreement is fairly chosen
(3) The FWC must be satisfied that the group of employees covered by the agreement
was fairly chosen.
(3A) If the agreement does not cover all of the employees of
the employer or employers covered by the agreement, the FWC must, in deciding
whether the group of employees covered was fairly chosen, take into account whether
the group is geographically, operationally or organisationally distinct.
[10] If the Commission is not satisfied that a non-greenfields enterprise agreement meets
the “genuinely agreed” requirement in s 186(2)(a) or the “fairly chosen” requirement in s
186(3) and (3A), the agreement cannot be approved unless the Commission accepts an
undertaking under s 190 that addresses the Commission’s concern about the requirement.
Background circumstances
[11] Rigforce is a labour hire provider to the offshore drilling industry, and trades under
that name. It carries the Australian Company Number (ACN) 142 037 198. Rigforce was
previously named Interpeople Contracting Services Pty Ltd (ICS). In 2013 ICS, as Rigforce
then was, entered into the ICS Enterprise Agreement 2013 (ICS Agreement). Clause 2.1 of the
[2019] FWCFB 6960
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ICS Agreement provides that it covers ICS and its employees engaged to work in drilling rigs
in the classifications listed in Appendix A. The classifications, and rates of pay, set out in
Appendix A of the ICS Agreement are as follows:
FULL TIME EMPLOYEES
Classifications Annual Salary Day Rate Base rate of pay (per hour)
Drilling Functions $119,280 $326.79 $27.23
Maintenance and Trades $105,840 $289.97 $24.16
Non-Drilling Support Functions $97,440 $266.96 $22.25
Processing and Operations $97,440 $266.96 $22.25
CASUAL EMPLOYEES
Classifications Casual Rate Day Rate Base rate of pay (per hour)
Drilling Functions $131,208 $720.92 $60.08
Maintenance and Trades $116,424 $639.69 $53.31
Non-Drilling Support Functions $107,184 $588.92 $49.08
Processing and Operations $107,184 $588.92 $49.08
[12] The ICS Agreement does not confer upon employees any entitlement to have the
above rates of pay increased while the agreement is in operation. Clause 14.4 simply states:
14.4 The Company will review the classification pay scales in Appendix A
annually. Upon review, the Company may, at its complete discretion, increase
the classification pay scales.
[13] The Form F17 statutory declaration which accompanied ICS’s application for approval
of the ICS Agreement was signed by Mr Conor O’Brien, gave his business address as Level 2,
Suite 8, 99-10 Frances Street, Northbridge WA, and disclosed that three casual employees
voted to approve the ICS Agreement.
[14] In 2015, an entity named RF Managed Services Pty Ltd (RFMS), ACN 144 937 968,
entered into the RFMS Enterprise Agreement 2015 (RFMS Agreement). It is not in dispute
that RFMS is a related entity of Rigforce/ICS. The nominal expiry date of the RFMS
Agreement is 6 August 2019. Clause 2(b) of the RFMS Agreement provides that its “parties”
are RFMS and its employees covered in the classifications in the RFMS Agreement. The
classifications, and the rates of pay, are contained in Appendix A as follows:
Permanent Employees Casual Employees
Classifications Base Rate Day Rate Base Rate Day Rate
of Pay of Pay
Drilling Functions $22.58 $270.94 $28.22 $677.35
Maintenance and Trades $21.59 $259.03 $26.98 $647.57
Non-Drilling Support Functions $20.00 $240.00 $25.00 $600.00
Processing and Operations $21.27 $255.20 $26.58 $638.00
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[15] It may be observed that the RFMS Agreement covers the same classifications as the
ICS Agreement, and that the rates of pay are significantly lower.
[16] The Form F17 statutory declaration which accompanied RFMS’s application for
approval of the RFMS Agreement discloses that the RFMS Agreement was made with three
casual employees.
[17] Mr Cain’s statement of evidence disclosed, for relevant purposes, the following
matters which occurred after the RFMS Agreement was made:
in 2018 the AWU had formed an “Offshore Alliance” (Alliance) with the CFMMEU,
and the Alliance commenced a targeted campaign to lift wages and conditions in the
offshore drilling sector;
the campaign’s objective was to stop a “race to the bottom” in respect of wages and
conditions for employees in the sector and deliver AWU-negotiated enterprise
agreements with every rig operator and labour hire business;
it was identified by the AWU and the CFMMEU that Rigforce had the lowest terms
and conditions in the drilling sector via the RFMS Agreement;
a decision was made to gear the campaign to the re-negotiation of the RFMS
Agreement, and it was intended to start discussions with Rigforce in June 2019 shortly
before the nominal expiry date of the RFMS Agreement;
the AWU recruited as members about 25 persons in the workforce utilised by Rigforce
in the period November 2018 to June 2019, and it engaged in extensive public
communications concerning its campaign and intention to seek a replacement
agreement with Rigforce;
the AWU sent a letter addressed to Martin Flojgaard, the Principal Advisor, Employee
and Industrial Relations to “Rigforce Global” dated 25 April 2019, in which it advised
that it understood that bargaining for an agreement to replace the RFMS Agreement
would soon commence and sought recognition of the AWU as bargaining
representative in that process;
on the same date the AWU became aware of the Decision approving the RFD
Agreement, which it previously had no knowledge of;
in an email dated 6 May 2019, Mr Flojgaard (with “Rigforce” above his name)
responded by saying that RFMS was not in a position to agree to bargain at that stage,
was happy to continue informal discussions with the AWU, and was not in a position
to recognise the Alliance at that stage; and
Mr Cain had been provided with two employee payslips which showed a change in the
employing entity from RFMS (in the pay period 11-24 February 2019) to Rigforce (in
the pay period 8-21 April 2019).
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[18] The RFD Agreement was made on 5 April 2019. Clause 3.1 of the RFD Agreement
provides that it covers Rigforce and employees of Rigforce employed in the classifications
contained in the agreement. Annexure A of the RFD Agreement sets out the classifications,
and the starting-point rates of pay for those classifications, as follows:
Permanent Employees Casual Employees
Classifications Base Rate Permanent Base Rate Casual
of Pay Composite of Pay (inc Composite
Daily Rate 25% casual Daily Rate
Loading) (inc 25%
casual
loading
Drilling Functions $24.68 $296.16 $61.70 $740.40
Maintenance $24.00 $288.00 $60.00 $720.00
Drilling Support Functions $22.00 $264.00 $55.00 $660.00
[19] In respect of increases to the above rates of pay, clause 18.3 of the RFD Agreement
provides:
18.3 The minimum rates of pay set out in Annexure A - Classification and Pay
Scales are subject to annual increase (if any) from 1 July 2020 and for each
year thereafter (until the Agreement's nominal expiry date) in accordance with
the Australian CPl.
[20] The Form F16 application for approval of the RFD Agreement was signed by Mr
O’Brien on behalf of Rigforce. It identified that three employees had acted as their own
bargaining representatives. The Form 17 statutory declaration was made by Mr O’Brien as the
Managing Director of Rigforce. It can be discerned from the declaration that there were three
employees covered by the RFD Agreement at the time it was voted upon (one of whom was a
casual employee), and all three voted to approve the agreement. In respect of the steps taken
to explain the terms of the agreement, and the effect of those terms, to the relevant employees,
Mr O’Brien stated in his declaration as follows:
Step taken and the explanation given
The employer discussed the terms of the proposed
Agreement and the effect of those terms on an
individual basis with each employee who will be
covered by the proposed Agreement.
This discussion was conducted on a clause by clause
basis, whereby the employer highlighted the
differences between the proposed Agreement and
existing ICS Enterprise Agreement 2013 [2013]
FWCA 9015, and additionally advised the relevant
employees of instances where a term or condition of
employment was provided by the Award but was
not included as separate entitlement in the proposed
Agreement.
Date of step
8 March 2019
12 March 2019
13 March 2019
[2019] FWCFB 6960
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The employer allowed each employee to ask
questions, and provided answers to each question
asked.
The employer also provided links to two recently
approved enterprise agreements covering the
offshore drilling industry to the relevant Employees
for the purpose of demonstrating the terms and
conditions of employment provided by employers
operating similar businesses to the employer.
Employees were encouraged to contact the
employer if they had any further queries in relation
to the Agreement. As a result, the employer received
one (1) additional query from the relevant
employees, which it answered.
A further email was issued by the employer on 13
March 2019 to all relevant employees indicating
that, in addition to the information provided on 6
March 2019, 'Accident Pay' as a term of the
Award was not included as a term in the proposed
Agreement. A copy of this email and the relevant
attachments is attached to this Application and
marked "Annexure C"
12 March 2019
13 March 2019
[21] In respect of what Rigforce did to take into account the particular circumstances and
needs of relevant employees in explaining the terms of the agreement and their effect, Mr
O’Brien said the following things were done on 6 March 2019 in relation to all relevant
employees:
“Each individual employee covered by the Agreement nominated themselves as their
bargaining representative.
As a result, the employer prepared an explanatory document drafted in plain English
which set out each clause of the proposed Agreement, the meaning of each term, and
set out the material differences between the proposed Agreement and the existing ICS
Enterprise Agreement 2013 [2013] FWCA 9015 and the Award. This document
was emailed to employees at the commencement of the access period.
Each of the relevant employees fully and properly understood the terms of the
Agreement, and the effect of those terms on their employment as a result of their
previous experience in the offshore drilling industry.
Specifically, each of the relevant employees has between 12 months’ and 11 years’
experience in the offshore drilling industry and possess the necessary skills,
qualifications and experience across all the classifications in the Agreement.”
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[22] The explanatory document referred to above (explanatory document), which was
annexed to Mr O’Brien’s Form F16 declaration, gave an explanation of various terms of the
Agreement in a table with four columns, which were headed “RFD Agreement clause”,
“Explanation”, “How does the RFD Agreement change from the ICS Agreement”, and “How
does the RFD Agreement differ from the Hydrocarbons (Upstream) Award 2010 (Award)”
respectively. In relation to the classifications and rates of pay set out in Annexure A, the
statement in the third column of the explanatory document concerning how the RFD
Agreement changed from the ICS Agreement relevantly includes the following (underlining
added):
“The minimum rates of pay in the RFD Agreement have been increased.
The classification of “Non-Drilling Support Functions” has been renamed to “Drilling
Support Functions” for clarity.
The RFD Agreement no longer includes the classification of “Processing and
Operations” which was included in the ICS Agreement…”
[23] It is apparent, and Rigforce has conceded, that the underlined part of the statement is
incorrect. The hourly and daily rates for permanent employees in all three classifications
under the RFD Agreement are lower than the equivalent rates in the ICS Agreement that was
entered into in 2013, at least until the first CPI increase is due on 1 July 2020 (and, having
regard to the current low rate of inflation, almost certainly not even then for the Drilling
Functions classification).
[24] Mr O’Brien’s witness statement gave the following information concerning the
explanation of the terms of the RFD Agreement given to relevant employees:
the RFD Agreement was with the three employees of Rigforce in the classifications in
the agreement at the relevant time, two of whom were permanent employees and one
of whom was a casual;
on 6 March 2019 Mr O’Brien sent an email to the three employees which attached the
explanatory document, and the email contained web links to the ICS Agreement, the
Hydrocarbons Industry (Upstream) Award 2010 (Award), and two other recent
offshore drilling enterprise agreements entered into by competitors;
Mr O’Brien had individual discussions with each of the three employees about the
RFD Agreement (one in person, and two by telephone), he went through the
agreement with each employee using the explanatory document;
each employee was at the time paid significantly in excess of the rates specified in the
RFD Agreement, and both the permanent employees raised a concern that their actual
rates might be reduced to the rates in the agreement once it was approved;
in response, Mr O’Brien said (in substance) that the rates in the RFD Agreement were
the minimum rates, and they could be dropped back to them to ensure that Rigforce
was able to compete for future work in what was a very competitive market; and
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Mr O’Brien also said that the rates in the RFD Agreement were higher than for the
agreements for the two competitors against which it benchmarked itself, and this is
what the rates explanation in the explanatory document was meant to say.
The Decision
[25] The Decision was brief, as is common in the case of uncontested agreement approval
applications, and relevant to the matters raised in this appeal only stated that: “I am satisfied
that each of the requirements of ss 186, 187 and 188 as are relevant to this application for
approval have been met”.3
Appeal submissions
[26] The AWU submitted generally that the material before the Commissioner disclosed
that there were only three employees covered by the RFD Agreement, the employees had
appointed themselves as bargaining representatives, discussions about the agreement were
held with employees individually and there were no collective meetings, no information was
given about what was discussed, information was provided by means of links to the internet,
the agreement covered a large number of classifications, and the work under the agreement
would be performed in all states and territories. There was no explanation why the agreement
only covered Rigforce’s blue collar employees or why it was fair to exclude maritime
workers. These matters, it was submitted, should have given rise to concerns and further
inquiries about the agreement-making process and whether the coverage of the RFD
Agreement was fairly chosen. However the Commissioner only made the “sweeping” finding
in paragraph [2] of the Decision and there is no indication that he considered the specific
requirements in s 186(2) and (3).
[27] In relation to the “genuinely agreed” ground of appeal, the AWU submitted:
the Commissioner could not be satisfied that Rigforce complied with the pre-approval
step in s 180(5);
in this case the Commissioner needed the information about what the employees had
been told in their individual discussions before voting, but no such information was
provided;
the Commissioner also failed to consider whether there were no other reasonable
grounds for believing the agreement had not been agreed to, as required by s
188(1)(c);
there were a number of questions that could logically bear upon whether the
agreement of the relevant employees was genuine, and there were reasonable grounds
to believe that the agreement of the employees was not real or authentic in the sense of
the employees having an appreciation of the terms and conditions provided by the
enterprise agreement across the range of employees covered;
3 [2019] FWCA 2332 at [2]
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the use of the Rigforce entity to bargain for a new agreement to replace the ICS
Agreement rather than bargaining for a new agreement with the much larger
workforce employed by the RMFS entity, with the subsequent transfer of at least one
employee from RMFS to Rigforce, was indicative of a lack of genuine agreement,
particularly as none of this was ever explained to the three employees of Rigforce;
the inaccurate information concerning the rates of pay in the explanatory document
went to the essence of agreement-making, given that for agreement-covered
employees it is the agreement-making process which leads to wage increases; and
Rigforce’s reliance on the fact that the three employees were paid rates in excess of
those in the RFD Agreement also suggested a lack of genuine agreement, since (as
found in KCL Industries4) they had no stake in the agreement’s rates of pay and their
assent to those rates was therefore not authentic.
[28] As to the “fairly chosen” ground, the AWU submitted that the fact that:
there were only three employees who made the RFD Agreement;
the RFD Agreement had a broad coverage; and
the Rigforce business had the bulk of its workforce employed by a different entity
under the RFMS Agreement, who were now likely to be moved to employment by
Rigforce under the RFD Agreement;
should have raised a “red flag” concerning whether the coverage of the agreement was fairly
chosen and led to a broader inquiry into this question. They also indicated that the business
rationale for the selection of the coverage of the RFD Agreement was a sham.
[29] Rigforce submitted, in relation to the “genuinely agreed” appeal ground, that:
the evidence before the Commissioner showed that the explanation given to the
employees by Rigforce was detailed and extensive, in that Rigforce (with the aid of
the explanatory document) discussed the RFD Agreement clause by clause and
highlighted the differences with both the ICS Agreement and the Award, and also
allowed employees to ask questions, answered the questions asked, and provided links
to recently-approved agreements entered into by employers operating similar
businesses in the industry;
the AWU had been unable to identify any reasonable step for the purpose of s 180(5)
which should have been, but was not, taken;
the fact that the RFD Agreement was made with three employees, each of whom
appointed himself as bargaining representative, or that Rigforce met with them
individually, could not legitimately give rise to any concern about the genuineness of
agreement; and
4 [2016] FWCFB 3048, 257 IR 266
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there was no matter identified by the AWU which could properly give rise to any
reasonable grounds for believing that the RFD Agreement was not genuinely agreed to
for the purposes of s 188(1)(c).
[30] In relation to the incorrect statement concerning the rates of pay in the RFD
Agreement compared to the ICS Agreement, Rigforce submitted that an explanation of the
terms of an agreement and their effect does not have to be perfect in order to comply with s
180(5), and mistakes and omissions will inevitably occur. The incorrect statement did not
give rise to reasonable grounds for believing that the RFD Agreement had not been genuinely
agreed to by employees, since it was a “one-word error” which concerned only one aspect of
the agreement and was only part of the information provided by Rigforce; Rigforce had
responded squarely to the questions of employees about the rates and the employees had still
voted for the agreement; the significance of the rates in Annexure A for the employees was
diminished because their actual rates of pay were significantly higher; Annexure A was not
hard to understand and a link to the ICS Agreement was provided which meant that
employees could undertake their own comparison; the employees as bargaining
representatives were directly involved in bargaining and therefore could be assumed to have a
reasonable understanding of the terms of the agreement they bargained for; and the error was
unintentional and would readily have been noticed by the employees. Accordingly there was
no basis to conclude that the incorrect statement deceived employees into voting for
something they would not otherwise have voted for. In the alternative, Rigforce submitted
that the incorrect statement was an error of a “minor procedural or technical nature” which
did not disadvantage the employees, and thus the “genuinely agreed” requirement was
capable of satisfaction under s 188(2).
[31] In relation to the “fairly chosen” ground of appeal, Rigforce submitted that the AWU
had failed to articulate how the Commissioner had erred. There was evidence that the
classifications covered by the RFD Agreement were operationally distinct, since it comprised
the traditional blue collar roles performed on offshore drilling facilities and was reflective of
the coverage in the previous ICS Agreement and the coverage of the Award. The fact that the
agreement was made with a small group of employees did not by itself support the conclusion
that the coverage was not fairly chosen.
Consideration
The fairly chosen ground
[32] It is convenient to deal with this ground first. We consider that it has insufficient merit
to justify the grant of permission to appeal. Although the Commissioner made no explicit
finding to this effect, the material before him supported the conclusion that the group of
employees covered by the RFD Agreement was at least operationally if not geographically
distinct. The RFD Agreement, as we comprehend the position, covers all of Rigforce’s
employees who perform “blue collar” functions on offshore drilling platforms, and it is self-
evident that such employees would be both operationally and geographically distinct from any
onshore employees of Rigforce. The only group of Rigforce employees that the AWU
suggested might have been included in the coverage in order to render it fair were maritime
(that is, seagoing) employees, but the operational difference between such employees and
those covered by the RFD Agreement is equally self-evident. A conclusion that the group of
[2019] FWCFB 6960
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employees covered by an agreement is operationally or geographically distinct favours, but is
not determinative of, a conclusion that the coverage of an agreement was fairly chosen.5
[33] The other relevant factors support the conclusion that the coverage of the RFD was
fairly chosen. The coverage is the same (less an obsolete classification) as the predecessor
ICS Agreement approved by the Commission (as well as the RFMS Agreement), which
assists to explain the business rationale for the choice of coverage.6 It has a logical
relationship with the coverage of the Award. The mere fact that the RFD Agreement was
made with only three employees is not of itself demonstrative that the group was not fairly
chosen.7 Questions may arise where a small group of employees make an agreement with
their employer covering a much wider group in terms of classifications and geography,8 but
contrary to the submissions of the AWU, the coverage of the RFD Agreement was not
significantly wider than the group of employees who made the agreement. The RFD
Agreement only contains three classifications discrete to the business function of off-shore
drilling and, as the statement of Mr O’Brien revealed, the three employees who made the
agreement are spread across the three classifications. The Australia-wide geographical
coverage of the RFD Agreement is more nominal than real, since the areas in which off-shore
drilling activity actually occurs are limited.
[34] There is no evidence that the coverage was chosen arbitrarily or in a discriminatory
fashion, or in order to manipulate the group of employees of Rigforce who were to participate
in the bargaining process. The real complaint of the AWU is that the Rigforce business has
changed the corporate entity it uses to employ its workforce and make enterprise agreements
in order to avoid bargaining with the substantial portion of its existing workforce, for many of
whom the AWU would have been the default bargaining representative. It may be accepted
that an inference could be drawn from the available material that this is what has occurred,
although we note that Rigforce’s position is that it wished to consolidate its employment in
one single corporate entity. However, it seems to us that the “fairly chosen” requirement in s
186(3) and (3A) is concerned with the selection of the group of employees employed by the
employer or employers who made the agreement in question, and does not deal with a
situation where a group of companies selects (and perhaps manipulates) different employing
entities within the group at different times for the purpose of making enterprise agreements
and operating as the employer of the relevant part of the workforce. In other words, taking the
AWU’s case at its highest, it is not demonstrative of any error in the conclusion that the
“fairly chosen” requirement was satisfied.
The genuinely agreed ground
[35] In considering the “genuinely agreed” ground of appeal, it is necessary for reasons
which will become apparent to consider in detail only the question of compliance with the
pre-approval step in s 180(5). The nature of the requirement in s 180(5) was analysed in detail
by the Federal Court (Flick J) in CFMEU v One Key Workforce Pty Ltd.9 We adopt the
5 Aerocare Flight Support Pty Ltd v TWU [2017] FWCFB 5826, 270 IR 385 at [26]
6 Retail and Fast Food Workers Union Incorporated v Woolworths Group Limited [2019] FWCFB 2355 at [42]
7 CFMEU v John Holland Pty Ltd [2015] FCAFC 16, 228 FCR 297, 247 IR 55 at [33]
8 See e.g. KCL Industries [2016] FWCFB 3048, 257 IR 266
9 [2017] FCA 1266, 270 IR 410 at [94]-[109]; affirmed on appeal: [2018] FCAFC 77, 277 IR 23
[2019] FWCFB 6960
14
summary of that analysis set out in CFMMEU v Ditchfield Mining Services Pty Limited,10
which reduced it to the following four propositions:
(1) whether an employer has complied with the obligation in s 180(5) depends on
the circumstances of the case;
(2) the focus of the enquiry whether an employer has complied with s 180(5) is
first on the steps taken to comply, and then to consider whether:
• the steps taken were reasonable in the circumstances; and
• these were all the reasonable steps that should have been taken in the
circumstances;
(3) the object of the reasonable steps that are to be taken is to ensure that the terms
of the agreement, and their effect, are explained to relevant employees in a
manner that considers their particular circumstances and needs. This requires
attention to the content of the explanation given; and
(4) an employer does not fall short of complying with the obligation in s 180(5) of
the FW Act merely because an employee does not understand the explanation
provided.
[36] Additionally, we also adopt the analysis of Gostencnik DP in BGC Contracting Pty
Ltd11 concerning the nature of a statutory obligation to take “all reasonable steps” as follows
(footnote omitted):
“[43] A requirement or obligation to take “all reasonable steps” seems to me to require
the identification of the steps a reasonable person would regard as reasonable in the
circumstances that apply. Whether particular steps are reasonable will depend on the
particular circumstances existing at the time the obligation arises. A requirement to
take all reasonable steps does not extend to all steps that are reasonably open in some
literal or theoretical sense…”
[37] Leaving aside the issue of the incorrect statement in the explanatory document, to
which we will return, we do not accept the AWU’s submission that the information before the
Commissioner was insufficient to permit him to form a conclusion concerning compliance
with s 180(5). As we have earlier set out, Mr O’Brien’s statutory declaration set out in
considerable detail the means by which the terms of the RFD Agreement and their effect was
explained to the employees. This was done by means of the explanatory document sent to
each employee, which addressed each of the terms in the RFD Agreement and described how
they differed from the ICS Agreement and the Award. The explanatory document itself was
annexed to the declaration. Mr O’Brien described how he spoke to each individual employee,
took them through the explanatory document, and answered any questions which they had.
We do consider that it was necessary for the Commissioner to inquire what was said in the
individual discussions with each employee, since (leaving aside the error) we consider that it
was open to conclude that the provision of the explanatory document itself was sufficient to
10 [2019] FWCFB 4022 at [64]-[68]
11 [2018] FWC 1466
[2019] FWCFB 6960
15
comply with s 180(5). In any event, Mr O’Brien did give a broad description of what
transpired, and this was sufficient in the circumstances.
[38] The position here could not be more different than that applying in the One Key
Workforce litigation, where the employer simply asserted in the Form F16 statutory
declaration that s 180(5) had been complied with, when in fact the employer had done little
more than read out the terms of the agreement the subject of the proceedings to employees.12
Here, but for the incorrect statement in the explanatory document, it might be said that the
approach taken by the employer was a model of its kind.
[39] However that incorrect statement changes the position. The existing minimum pay
entitlements of the three employees immediately before they made the RFD Agreement were
those contained in the ICS Agreement. Any explanation of the effect of the terms concerning
the rates of pay in the RFD Agreement necessarily required the identification of how the pre-
existing rates of pay in the ICS Agreement were to be altered by the RFD Agreement. It is a
statement of the obvious that rates of pay are, to employees, likely to be the most
fundamentally important aspect of an enterprise agreement. That position was no different
here merely because the employees at that time were receiving actual rates of pay higher than
what was proposed in the RFD Agreement because, as the statement of Mr O’Brien revealed,
the employees were concerned about the prospect of their pay rates being reduced in the
future to those in the agreement, and Rigforce advised them that this could possibly happen.
[40] In the circumstances, the reasonable step required to be taken by Rigforce for the
purpose of s 180(5) was to give an accurate explanation of any change in the quantum of the
rates of pay that would be effected if the RFD Agreement displaced the ICS Agreement. This
step was all the more necessary because the minimum rates of pay for permanent employees
were to be reduced at least until 1 July 2020 if not for longer.13 Rather than the explanatory
document clearly identifying the reduction in rates, it incorrectly conveyed to employees that
the rates constituted an increase upon those contained in the ICS Agreement. The explanatory
statement said that the minimum rates of pay in the “RFD Agreement have been increased”.
The clear import of these words is that the rates in the RFD Agreement had been increased as
against the ICS Agreement, not simply that they had been increased from some earlier offer.
The statement must be read in the context of the table in the explanatory statement, the
relevant column of which was concerned with the question “How does the RFD Agreement
change from the ICS Agreement?” The evidence of Mr O’Brien before us does not
demonstrate that this error was ever identified to employees let alone corrected. It makes
unavailable the conclusion that s 180(5) was complied with.
[41] The error in the explanatory document is identifiable on the face of the materials that
were before the Commissioner. No doubt the Commissioner, in the absence of a contradictor,
assumed that the content of the explanatory document was accurate and did not examine it
sufficiently closely. That is understandable. However, the conclusion that the Decision was
attended by appealable error in respect of compliance with s 180(5) is regrettably
unavoidable.
12 [2017] FCA 1266, 270 IR 410 at [99]-[108]
13 See Diamond Offshore General Company v Baldwin and Ors [2018] FWCFB 6907, 284 IR 1 at [34]-[35] concerning the
necessity to identify any reduction in remuneration in order to satisfy s 180(5).
[2019] FWCFB 6960
16
[42] In circumstances where there was a failure to comply with s 180(5), it was not
jurisdictionally available to the Commissioner to conclude that the “genuinely agreed”
approval requirement in s 186(2)(a) was satisfied absent the application of s 188(2), which
was clearly not considered by the Commissioner. In those circumstances, we consider it
necessary to grant permission to appeal in respect of the “genuinely agreed” ground, uphold
the appeal, and quash the Decision.
[43] That makes it unnecessary for us to consider the AWU’s submissions in relation to s
188(1)(c). It is sufficient to say that, leaving aside the question of whether the incorrect
statement in the explanatory document might give rise to a “reasonable ground for
believing…” under s 188(1)(c), we cannot not identify any arguable ground of appealable
error on this score.
[44] Having upheld the appeal, we consider the appropriate and efficient course is to remit
the application to approve the RFD Agreement to the Commissioner for re-determination.
That re-determination will require consideration to be given as to whether:
(1) the application of s 188(2) is available to overcome Rigforce’s non-compliance
with s 180(5); and
(2) the incorrect statement concerning rates of pay in the explanatory document
has any consequence for the Commission’s satisfaction or otherwise under s
188(1)(c).
[45] One of the reasons why we consider it more efficient to remit the matter to the
Commissioner is that we consider that it may be necessary, among other things, to ascertain
the position of the three employees who made the RFD Agreement and who were all
bargaining representatives as to the above matters, and to consider any undertakings that the
company may wish to offer. As an aside, we observe that this will also provide a continuing
opportunity for Rigforce and the AWU to attempt to resolve the larger issues involved in this
litigation. If any assistance of the Commission in that endeavour is requested, it will be
provided.
Orders
[46] We order as follows:
(1) Time is extended to 1 May 2019 to allow the AWU to lodge its notice of
appeal.
(2) Permission to appeal is granted in relation to ground 1 in the AWU’s notice of
appeal. Permission to appeal is otherwise refused.
(3) Ground 1 of the appeal is upheld.
(4) The Decision ([2019] FWCA 2332) is quashed.
(5) The application for approval of the RFD Enterprise Agreement 2019
(AG2019/835) is remitted to Commissioner Lee for reconsideration in
accordance with the above reasons for decision.
[2019] FWCFB 6960
17
VICE PRESIDENT
Appearances:
A Slevin of counsel on behalf of The Australian Workers' Union
A Pollock of counsel on behalf of Rigforce Pty Ltd t/a Rigforce
Hearing details:
2019.
Melbourne:
25 July.
Printed by authority of the Commonwealth Government Printer
PR713145
OF THE FAIR WORK MISSION THE
